Comment: How does the ALP and Coalition differ on paid parental leave?

The Coalition has pledged to assist families with a "fair dinkum" paid parental leave scheme based on a replacement wage, rather than the minimum wage. But Labor has warned this represents a "huge hit" to "every single worker." David Kennedy investigates the crucial ideological differences that underscore the two party's approach.

Baby feet

Source: AAP

The political divide between the Labor and Liberal party is being starkly illustrated by the recent announcement of the LNP’s Paid Parental Leave Scheme. Kevin Rudd has repeatedly attacked this as being ‘unfair’ – referring to the ‘millionaires’ that will benefit from this generous scheme. The advertisement campaign has begun, and at last there is a substantial distinguishing point between the major parties.

Rudd’s aversion to the Liberal Party’s Paid Parental Leave Scheme can be explained in two ways: either Rudd wants to appear fiscally responsible and is pouncing on the LNP’s first big-spending policy; or, it is an example of Rudd’s focus on the lower middle-class. A focus entrenched in Labor political policy-making that is increasingly being perceived as a disconnection with middle-class families. This disconnection has been felt by many around the country who view the ALP’s leadership over the past six years as increasingly reticent to address cost-of-living pressures.

Although the lines between both major parties have blurred recently, the ALP is traditionally a more socialist liberal party focusing on welfare distribution of tax to ensure egalitarian equality among Australians. A common remark by the Labor faithful is that wealthier families have more choice as to residence, schooling, public transport and related lifestyle amenities. Consequently, any pressure they face is based on choices made to achieve a better lifestyle. The LNP, contrastingly, prefers a more conservative economy and only intervenes on markets when they have become unfair. Historically, the LNP has promoted business and individual autonomy and sought taxes to provide basic services, resulting in a smaller government in hope of achieving a prosperous market. Hence, the ALP has sought more regulatory interference in the market to raise the equality of workers and ensure their protection; believing social institutions are integral to equality and enjoyment of life for all Australians.

Over the past six years the ALP has increased tax breaks for low income earners (from $6,000 to $18,200), and reduced payable tax by up to $300 for those earning up to $80,000. However, those earning more have been left out in the cold when it comes to assistance from the government. A family with four children, for example, whose parents earn between $90,000 and $150,000, are increasingly disillusioned by the current government. The government’s allowance of companies to pass-on carbon tax costs to consumers, means-testing benefits, rising costs of petrol, and so on, make it difficult for families to pay for school fees, food and medical and dental expenses. Additionally, in this economy it is difficult for this family’s children to find employment from small businesses and retailers suffering the effects of low consumer confidence. These families are not rich, their disposable income is much less than childless couples earning between $90,000 and $150,000, and increasingly they feel disdain towards the current structure of government.

Bring along Tony Abbott’s paid parental leave scheme: a scheme that recognises how hard parents work, a scheme that recognises mothers who wish to work hard, enter the workforce and also have children will not be left out in the cold. Abbott’s Paid Parental Leave Scheme promises 26 weeks of leave paid at the greater of the primary carer’s replacement wage (capped at $150,000) or minimum wage. Rudd’s current scheme provides 18 weeks of leave at minimum wage. Abbott’s scheme is funded through a 1.5% levy on companies with taxable income above $5 million per annum (accompanied by a reduction of company tax to 28.5%); whereas Rudd’s is funded from general revenue.

Currently, there seems to be a dialogue in Australia that those who earn more do not need assistance. The lifestyle choices families make appear to be held against them, while concurrently the higher costs-of-living go unrecognised. Women who earn $60,000 per annum have worked hard, as have women who earn $100,000 per annum. This scheme recognises both women’s right to have children, removes companies’ requirements to pay parental leave – thereby incentivising gender neutral employment and promotion (a topic much discussed at university level) – and affords them six-months off work without being financially restricted to minimum wage.

Between 4.1% and 11.6% of employed women receive minimum wage. The remaining population of employed women earn more than this and would benefit from having 26 weeks of salary replacement.

Rudd’s attack on this policy highlights to these families his lack of insight into the needs of middle-class families. Despite the lack of policy debate, a switch to a less welfare orientated party seems desirable for these families because an improved economy, removal of the carbon tax, fringe benefit tax and mining tax will provide welcome relief to the market. If government will not alleviate pressure on middle-class families, market-advantageous policies will. As it stands, reduced costs in the market through lower taxation and increased confidence will provide a lower cost of living and opportunities for these parents’ children. Such relief will not be provided by the ALP if Rudd is once again elected.

As the campaign advertisements begin both promoting and criticising Abbott’s Paid Parental Leave Scheme, the question of why are we paying for wealthy women to have children is beginning to reveal the political difference between the two major parties. It could be that the ALP is harnessing its working class rhetoric to contrast its lower-middle class ideology with the LNP’s focus on market confidence. The critique from Rudd of this scheme provides a partial insight into the divergent economic and social ideologies of the ALP and LNP; an insight that has been lacking due to the inability to review and compare the LNP’s substantive policies. It must not be forgotten that many women, and men, fall within the middle-ground and would benefit greatly from Abbott’s Paid Parental Leave scheme. A family with four children and primary carer earning $90,000 is not receiving $45,000 disposable income under Abbott’s scheme. Although, a vote for Labor is support for a distribution favouring the lower-middle class; and that vote depends on one’s political leanings.

has a Bachelor of Law and International Relations from Flinders University and is a volunteer worker for various refugee organisations.

6 min read
Published 26 August 2013 at 11:02am